• CFRED CUHK Law

Mind the App: Mobile Access to Financial Information and Consumer Behavior

Yaron Levi – USC Marshall Business School;

Shlomo Benartzi - UCLA Anderson School of Management


-- The way consumers interact with their personal finances has changed dramatically over the past two decades. In the 1990s, consumers had to call their banks to obtain current financial information or wait for a slightly outdated bank statement to arrive in the mail. As of the early 2010s, with the improvements in cellular data networks and the introduction of mobile financial apps, consumers could access their financial information at any time and practically any place.


In our recent paper, "Mind the App: Mobile Access to Financial Information and Consumer Behavior," we address the question,

Do Mobile phones influence our financial behavior?


Specifically, we test how access to personal financial information from a mobile device influences the behavior of consumers who already had access to the same information from a personal computer. We use data from a large fintech company offering free online personal financial management software that includes account aggregation technology. This technology allows users to monitor their finances by linking all their financial accounts into one app, including checking, savings, retirement, investment, loans, etc. We include in our sample users who have been using the software via a personal computer for several months before installing the mobile app.


We find that users drastically increase the attention to their finances immediately after installing the mobile app. Users increase their login frequency from four times per month before the mobile app installation to more than sixteen times per month immediately following the app installation. Further, the increase in logins is mostly during retail peak time (4 pm to 6 pm) on weekdays.


We also test the impact of mobile apps on spending behavior. We focus on discretionary spending, which is spending on items that are non-essential and can be adjusted over a short period (i.e., restaurants, hobbies, home improvement). We find that after the installation of the mobile app, consumers reduced their discretionary spending by 11.6 percent, which translates to about $430 per month for the average consumer in our sample.


Of course, the decision to install the mobile app is in the hand of the consumers. The decline in spending may be a result of a separate decision to manage finances better, which also led these consumers to install the mobile app. In order to establish a causal relationship between access to personal financial information on mobile devices on consumer behavior, we use the gradual release of the mobile apps on different devices (iPhone, iPad, and Android). In the first days following each of the mobile app releases, there was a spike in the number of users installing the app on their phones. It is unlikely that a large group of users decided independently to install a mobile app in any given week. It is even less likely that this specific week happens to coincide with the release of the mobile app. And it is extremely unlikely that this same pattern arose in each of the different mobile app releases. Hence, the large number of users installing the mobile app right after its release was triggered by the app release and not by an independent decision to suddenly cut spending. We find the same change in login and spending behavior for users who installed the mobile app immediately after its release.


Mobile devices have a profound impact on our lives in many areas. The use of mobile devices was found to be related to lower grades among university students (Jacobsen and Forste, 2011), unsafe behavior while crossing the road by pedestrians (Thompson et al., 2013), inattentional blindness among drivers (Caird et al., 2008; Strayer and Johnston, 2001), increased sense of ownership (endowment effect) among consumers assessing a product (Brasel and Gips, 2014), and influence investors’ judgment (Brown et al., 2019). Our results suggest that mobile phones have a substantial impact on consumer behavior and demonstrate the potential embedded in mobile devices to influence individuals’ decision-making process for the better. Consumers seem to be using their mobile devices while in the store to check their account balance before making a purchase, and often decide to avoid the transaction altogether.

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